WTI Crude Oil: Bearish setup intact

Developing bearish head and shoulders pattern intact

Our September 11 edition of The Chart Check showed the risk of a bearish continuation head and shoulders pattern for WTI Crude Oil futures. This pattern continues to develop as the declining 26- and 40-day moving averages provide an overhang near 63.39 and 64.23, respectively, just below the revised shoulder highs at 64.76-65.10.

Key support remains 61.94-61.45, where a decisive breakdown would confirm this bearish setup and suggest deeper downside risk to 60.02-59.74 (late May lows) and potentially toward 57 (pattern target). The early May and early April lows at 55.30-55.12 offer additional support.

It would take a rally above the daily moving averages and then the shoulder highs to negate this developing bearish pattern on WTI Crude Oil.

Chart 1: WTI Crude Oil

Bearish October and November seasonality a challenge for WTI

WTI Crude Oil is approaching its weakest seasonal stretch of the year based on data back to 1986. October and November have historically been the most challenging months, with average returns of -2.20% and -2.97%, respectively.

Chart 2: WTI Crude Oil monthly seasonality back to 1986